Oh come on. If you buy a cable box, and hack it to decrypt content you haven't paid for, that's supposed to be OK? How about if you buy a blank key from the hardware store, and then steal, copy, and return the key to the back door of the movie theater. You then use the copied key to sneak into movie showings you haven't paid for - do you really think that's OK?
I saw the Motorola cable modem + integrated WiFi at the most recent Society of Cable Television Engineers show in San Antonio last month. I was interested to find out how they're handling the issue of multiple devices behind a router that's keeping the cable operators from charging per PC, as they'd like to. Turns out, the Motorola box will transmit the MAC addressses of anything on the home side of the box up to the cable company's management system, so that the cable company knows what's behind the box, unlike with the 3rd party router/firewall combos a la Netgear or D-Link. Very ingenious.
1. The telecom industry is damn close to a zero marginal cost business (once you've built the network, the cost of sending an incremental bit of traffic is virtually zero) 2. The telecom industry has huge upfront capital costs for building the network - these need to be financed (i.e. the network needs to be paid for over time)
Hence, pricing is heavily driven by #2 - you need to charge enough to make your interest payments.
Problem is, if you have a provider which has gone bankrupt and gone through resturucturing, it will have sharply reduced debt and hence interest payments (assuming, as typical, some sort of debt-for-equity swap was part of the bankruptcy proceedings). Hence, you've got a player in the market which can charge prices damn close to #1, since it really doesn't have to worry about #2. This creates market prices below those at which the other (non-bankrupt) players can run their networks and pay their debt, driving them into bankruptcy as well.
Short answer is that Level 3 is actually pretty damn solvent, as telcos go, certainly better off than anyone but the RBOCs and some of the cable companies. Through some combination of tremendous foresight and blind luck, they raised a boatload of debt/equity/converts/you name it at the absolute peak of the market. Result? They have cash, enough to buy some of their bonds back at 30-40 cents on the dollar. Is Level 3 debt a good place to put your grandmother's retirement fund? Nope. Is it pretty attractive on the risk/reward scale? I think so.
OK, maybe this is a better analogy. You buy a movie ticket and go into the theater. Then, when nobody's looking, you open the back door and let 50 of your friends in (assume that the show isn't sold out, so that there are seats for them). They're clearly stealing revenue from the movie theater, and you've clearly done something wrong by letting them in. Software is very similar. Buy a copy, and you've bought just that: 1 copy, just like the movies (1 ticket per person). You don't get to watch the movie and then decide whether you want to buy a ticket at the end.
"If someone steals my software, then they are liable to me under the law-- not to the feds. The feds have no rights to my code and no rights to lock people up for violating my rights in this way."
Not true. The whole idea that the victim of a crime needs to want it to be prosecuted (i.e. he "refused to press charges") is simply untrue. Prosecutors decide what to prosecute, and don't need the victim's permission. Usually they won't bother when the victim objects to a prosecution (why waste the time), but they can if they want to. Also, in this case, you have a lot of property owners who _do_ want the government to act (BSA members, among others).
"IF someone pirates your software and then sells it, well then that would be theft. But those who give it away a guilty of mischief, but do not belong in a federal prison."
Nonsense. If someone steals your car, but doesn't make any money doing it (i.e. just drives it around for fun, rather than selling it to a chop shop), that's still theft. Alternatively, someone who picks the lock to your house but doesn't break anything, and then hands out copies of your house key to anyone who wants one, bears responsibility if your stuff gets stolen.
This whole idea that warez aficionados are just harmless pranksters who aren't hurting anyone is simply wrong. Are they causing billions in lost sales? Of course not (one copy does not equal one lost sale). Are there some folks out there who would have bought, but get a pirated copy instead? Certainly. Even the folks who say that they only use warez copies for "evaluation," and that they buy the software they like - no excuse. There's nothing requiring a software publisher to offer try before you buy. Some of those "evaluation" copies that were eventually rejected would also have been sales to people who regretted the purchase. Again, that's lost legitimate revenue.
"That's the same time we went from granulated sugar as a sweetener to High Fructose Corn Syrup, because it was easier for the food industry to deal with liquid rather than powdered supplies;"
Actually, no. The real reason that high fructose corn syrup is so prevalent (in the US, at least) is that the tariffs on cane sugar are so high that it becomes prohibitively expensive to use, forcing manufacturers to use other sweeteners. Irritated about corn syrup? Complain to the Florida sugar growers who throw a boatload of money at Congress every year (both parties) to keep the tariffs in place that drive up food costs for Americans and help to impoverish the Caribbean.
While there certainly are some folks like you, who only use downloaded MP3s for try before you buy, a huge percentage of the MP3s on people's systems are there as "download INSTEAD of buy." Now, this doesn't justify the industry's "every copied MP3 is a lost sale," but a sizable chunk of downloads are a lost sale, so I think Moby's probably right about this.
Certainly happened. Delta.com used to be a plumbing supply house in Georgia somewhere called Delta Plumbing. They registered the url first, and they kept it, since they had just as legitimate a claim to it as Delta Airlines. Delta Airlines eventually got the rights to it (for a tidy sum, I'm sure), but they had to negotiate it. Even funnier is Whitehouse.com, which is the site of a strip club - they had it first (and they place had used that name in the "real world" for years), and there's nothing that the Federal Gov't could do about it, other than to hope that as few kiddies as possible mistyped www.whitehouse.gov when trying to find out about our President. Although, during the Clinton years, it was debatable whether they.com or.gov site was more accurate.
Interestingly enough, you mention the _one thing_ that's genuinely difficult to patent. The USPTO has gotten so many perpetual motion machine applications over the years that it requires, for that one invention only, a working model. Anything else, paper's fine, but for perpetual motion, you gotta bring them a physical device.
Hardly. Joe Six-Pack doesn't have the $1 million an episode to produce an hour-long drama, nor the sets, etc. Yes, you might see a few more South Park's out there, but that's it. We've all seen public access TV - does anything think that we need more of it?
On another point, there are some real issues with this proposal, having to do with the nature of the network. Both cable and DSL networks are a heck of a lot more effective at downstream than upstream (nature of the RF). If people start trying to pull data from other endpoints, rather than the network core, it's going to overload the network much faster than if the content is coming from a central site.
As a Cox shareholder, given the performance Cox mgmt has delivered in generating cash flow and growing the business, I think that $1MM per year per officer is quite reasonable.
"Fair enough, but I'm kind of picturing how we might respond if (e.g.) a Bollywood [planetbollywood.com] company thought it could just breeze in and pay to have most of Detroit forcibly evacuated."
Detroit seems to have been voluntarily evacuated quite nicely.
"Excuse me? This is the same company that imposes a floor on long distance usage -- 3$ per month minimum. They claim this is for "billing overhead" which is 150% complete bullshit; it pads their bottom line by hundred of millions per month."
Not true, actually. There are actually substantial costs to maintaining and processing billing records, as well as receiving and processing payments. Each bill AT&T sends out costs ~$1.50 in printing (including depreciation of capital equipment, etc.) and mailing costs. That's why you'll often see LD carriers with no minimum monthly spend require you to pay with a credit card - lowers the transaction costs.
Maybe yes, maybe no. Splitting causes signal loss, and if the signal strength along your drop was already marginal, it might well be true. Given how cost conscious cable companies are, I doubt the tech would have gone to the hassle of a 2nd drop unless it were necessary.
Basically, if the cable operators want to stop this, it's pretty easy, but the way they're organized makes it more difficult. The frequencies used for cable modem downstreams are typically interspersed with the digital video channels, in the 550-860Mhz range. Cable modem upstream (along with telephony upstream and digital set top box return path, is almost always in the 5-42Mhz range (US values here, int'l mileage can and will vary). To provide cable modem, but no video, all they need to do is place a filter that will block 42-550Mhz. Not hard, but it requires the tech to be aware of both the video and data services the customer is getting. In reality, however, the field techs who handle video, and the ones focused on data, are two different orgs, with different trouble ticketing systems, etc, so the right hand often doesn't know what the left is doing, so getting the right filters in place can be a real pain.
Videophones have been the next big thing for 60 years - the technology problems have been solved, and they can be made cheaply, and provide acceptable quality even over standard phone lines. Problem is, on the consumer side, _people don't want to use them_. Video telephony has always been a technology searching for consumer demand, and it hasn't gotten there yet.
That's the danger, seriously. There's a clear tradeoff here: if software is too restrictive in what it will allow for a password (i.e. frequent changes, very complex passwords with no actual words, etc.), then the average user will give up trying to remember them, and start to write them down. You'll trade a situation where, by dedicating a lot of processing power to the task, you'll be able to crack some passwords, to one where every second keyboard has a Post-It stuck to the underside with this month's password. \
The wire may be cheap, but there are two problems: 1. Ordinary Cat 5 won't hack it, you'll need cable that's armored for either aerial or underground/trenched drop. The first needs to be water/temp resistant, the second also needs to have to strength to handle the pressure when the ground freezes (assuming you're somewhere where that happens). 2. The cost of the link is primarily the construction cost, not the cost of the medium itself. In the US, pulling underground fiber or coax costs ~$7 per foot, more in dense urban areas. That'll bring you to $35k for a mile, not $200. If it were that cheap to build last mile circuits with Cat5, the CLECs wouldn't have bothered with leasing ILEC local loops, they'd have just built their own.
Sure, laws can prohibit that stores deny access to minors! Car dealerships are prohibited from selling cars to persons under 18 (no right to contract), and gun dealers sure as heck can't just sell Glocks to any 13-year-old that walks in the door. We prohibit stores from engaging in transactions with minors all the time.
Yeah, we all thought back in 1995/6 that AOL was doomed: "As soon as people get their sea legs with the 'net, they'll branch out." Guess what? They didn't. AOL has succeeded brilliantly in making their walled garden proprietary service a great solution for the vast majority of netizens who aren't/. folks.
A partnership like this is going to be very helpful if Tivo is going to make the jump from being a product for the people who read this site, to a product for the 99+% of consumers who don't, and don't want to. AOL knows how to sell to those folks with an easy-to-use, and more importantly EASY-TO-EXPLAIN solution. Tivo's biggest problem has not been getting people to pay for the service once they understand it (there's a lot of "You'll take my Tivo from my cold dead hands" out there), but rather getting people to try it.
The most interesting potential here would be if AOL decided to throw some serious marketing $ behind this, and increase the inherent subsidy in the hardware prices, then penetration for these boxes could really take off.
Yeah, the gizmos are cool, but the service quality is awful. I literally get dropped 25-30% of the time when using my imode phone in Tokyo, vs. ~5% of the time in the US.
"And if you think they can buy EA and Square, not likely. They're rich, but not THAT rich. I dunno, I could be wrong - a better financial analyst could step in here - but EA and Square (which have a joint venture, recall) are pretty hefty companies, especially Square in Japan. I don't think they'd be that easy to buy."
Well, Square's market cap plus net debt is about $885MM, Nintendo's is $23.7BN, and EA's is $8.8BN. MSFT has about $38BN in Cash/Marketable Securities. If MSFT really wanted to, it could buy Square, Nintendo, and EA, and still have >$5 billion in cash on hand. The US and Japanese competition authorities almost certainly wouldn't let them do it, but they'd have the financial resources to do so. That being said, I fully agree with the rest of the material. MSFT certainly doesn't have a Midas touch on the consumer side - look at MSN.
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Oh come on. If you buy a cable box, and hack it to decrypt content you haven't paid for, that's supposed to be OK? How about if you buy a blank key from the hardware store, and then steal, copy, and return the key to the back door of the movie theater. You then use the copied key to sneak into movie showings you haven't paid for - do you really think that's OK?
I saw the Motorola cable modem + integrated WiFi at the most recent Society of Cable Television Engineers show in San Antonio last month. I was interested to find out how they're handling the issue of multiple devices behind a router that's keeping the cable operators from charging per PC, as they'd like to. Turns out, the Motorola box will transmit the MAC addressses of anything on the home side of the box up to the cable company's management system, so that the cable company knows what's behind the box, unlike with the 3rd party router/firewall combos a la Netgear or D-Link. Very ingenious.
Two things to remember:
1. The telecom industry is damn close to a zero marginal cost business (once you've built the network, the cost of sending an incremental bit of traffic is virtually zero)
2. The telecom industry has huge upfront capital costs for building the network - these need to be financed (i.e. the network needs to be paid for over time)
Hence, pricing is heavily driven by #2 - you need to charge enough to make your interest payments.
Problem is, if you have a provider which has gone bankrupt and gone through resturucturing, it will have sharply reduced debt and hence interest payments (assuming, as typical, some sort of debt-for-equity swap was part of the bankruptcy proceedings). Hence, you've got a player in the market which can charge prices damn close to #1, since it really doesn't have to worry about #2. This creates market prices below those at which the other (non-bankrupt) players can run their networks and pay their debt, driving them into bankruptcy as well.
Short answer is that Level 3 is actually pretty damn solvent, as telcos go, certainly better off than anyone but the RBOCs and some of the cable companies. Through some combination of tremendous foresight and blind luck, they raised a boatload of debt/equity/converts/you name it at the absolute peak of the market. Result? They have cash, enough to buy some of their bonds back at 30-40 cents on the dollar. Is Level 3 debt a good place to put your grandmother's retirement fund? Nope. Is it pretty attractive on the risk/reward scale? I think so.
The reason it's in there is:
1. Dave Barry's funny
2. The conference is AT the Hotel Pennsylvania, so it's relevant
OK, maybe this is a better analogy. You buy a movie ticket and go into the theater. Then, when nobody's looking, you open the back door and let 50 of your friends in (assume that the show isn't sold out, so that there are seats for them). They're clearly stealing revenue from the movie theater, and you've clearly done something wrong by letting them in. Software is very similar. Buy a copy, and you've bought just that: 1 copy, just like the movies (1 ticket per person). You don't get to watch the movie and then decide whether you want to buy a ticket at the end.
"If someone steals my software, then they are liable to me under the law-- not to the feds. The feds have no rights to my code and no rights to lock people up for violating my rights in this way."
Not true. The whole idea that the victim of a crime needs to want it to be prosecuted (i.e. he "refused to press charges") is simply untrue. Prosecutors decide what to prosecute, and don't need the victim's permission. Usually they won't bother when the victim objects to a prosecution (why waste the time), but they can if they want to. Also, in this case, you have a lot of property owners who _do_ want the government to act (BSA members, among others).
"IF someone pirates your software and then sells it, well then that would be theft. But those who give it away a guilty of mischief, but do not belong in a federal prison."
Nonsense. If someone steals your car, but doesn't make any money doing it (i.e. just drives it around for fun, rather than selling it to a chop shop), that's still theft. Alternatively, someone who picks the lock to your house but doesn't break anything, and then hands out copies of your house key to anyone who wants one, bears responsibility if your stuff gets stolen.
This whole idea that warez aficionados are just harmless pranksters who aren't hurting anyone is simply wrong. Are they causing billions in lost sales? Of course not (one copy does not equal one lost sale). Are there some folks out there who would have bought, but get a pirated copy instead? Certainly. Even the folks who say that they only use warez copies for "evaluation," and that they buy the software they like - no excuse. There's nothing requiring a software publisher to offer try before you buy. Some of those "evaluation" copies that were eventually rejected would also have been sales to people who regretted the purchase. Again, that's lost legitimate revenue.
"That's the same time we went from granulated sugar as a sweetener to High Fructose Corn Syrup, because it was easier for the food industry to deal with liquid rather than powdered supplies;"
Actually, no. The real reason that high fructose corn syrup is so prevalent (in the US, at least) is that the tariffs on cane sugar are so high that it becomes prohibitively expensive to use, forcing manufacturers to use other sweeteners. Irritated about corn syrup? Complain to the Florida sugar growers who throw a boatload of money at Congress every year (both parties) to keep the tariffs in place that drive up food costs for Americans and help to impoverish the Caribbean.
While there certainly are some folks like you, who only use downloaded MP3s for try before you buy, a huge percentage of the MP3s on people's systems are there as "download INSTEAD of buy." Now, this doesn't justify the industry's "every copied MP3 is a lost sale," but a sizable chunk of downloads are a lost sale, so I think Moby's probably right about this.
Certainly happened. Delta.com used to be a plumbing supply house in Georgia somewhere called Delta Plumbing. They registered the url first, and they kept it, since they had just as legitimate a claim to it as Delta Airlines. Delta Airlines eventually got the rights to it (for a tidy sum, I'm sure), but they had to negotiate it. Even funnier is Whitehouse.com, which is the site of a strip club - they had it first (and they place had used that name in the "real world" for years), and there's nothing that the Federal Gov't could do about it, other than to hope that as few kiddies as possible mistyped www.whitehouse.gov when trying to find out about our President. Although, during the Clinton years, it was debatable whether they .com or .gov site was more accurate.
>>
Interestingly enough, you mention the _one thing_ that's genuinely difficult to patent. The USPTO has gotten so many perpetual motion machine applications over the years that it requires, for that one invention only, a working model. Anything else, paper's fine, but for perpetual motion, you gotta bring them a physical device.
>>
Hardly. Joe Six-Pack doesn't have the $1 million an episode to produce an hour-long drama, nor the sets, etc. Yes, you might see a few more South Park's out there, but that's it. We've all seen public access TV - does anything think that we need more of it?
On another point, there are some real issues with this proposal, having to do with the nature of the network. Both cable and DSL networks are a heck of a lot more effective at downstream than upstream (nature of the RF). If people start trying to pull data from other endpoints, rather than the network core, it's going to overload the network much faster than if the content is coming from a central site.
As a Cox shareholder, given the performance Cox mgmt has delivered in generating cash flow and growing the business, I think that $1MM per year per officer is quite reasonable.
"Fair enough, but I'm kind of picturing how we might respond if (e.g.) a Bollywood [planetbollywood.com] company thought it could just breeze in and pay to have most of Detroit forcibly evacuated."
Detroit seems to have been voluntarily evacuated quite nicely.
"Excuse me? This is the same company that imposes a floor on long distance usage -- 3$ per month minimum. They claim this is for "billing overhead" which is 150% complete bullshit; it pads their bottom line by hundred of millions per month."
Not true, actually. There are actually substantial costs to maintaining and processing billing records, as well as receiving and processing payments. Each bill AT&T sends out costs ~$1.50 in printing (including depreciation of capital equipment, etc.) and mailing costs. That's why you'll often see LD carriers with no minimum monthly spend require you to pay with a credit card - lowers the transaction costs.
Maybe yes, maybe no. Splitting causes signal loss, and if the signal strength along your drop was already marginal, it might well be true. Given how cost conscious cable companies are, I doubt the tech would have gone to the hassle of a 2nd drop unless it were necessary.
Basically, if the cable operators want to stop this, it's pretty easy, but the way they're organized makes it more difficult. The frequencies used for cable modem downstreams are typically interspersed with the digital video channels, in the 550-860Mhz range. Cable modem upstream (along with telephony upstream and digital set top box return path, is almost always in the 5-42Mhz range (US values here, int'l mileage can and will vary). To provide cable modem, but no video, all they need to do is place a filter that will block 42-550Mhz. Not hard, but it requires the tech to be aware of both the video and data services the customer is getting. In reality, however, the field techs who handle video, and the ones focused on data, are two different orgs, with different trouble ticketing systems, etc, so the right hand often doesn't know what the left is doing, so getting the right filters in place can be a real pain.
Videophones have been the next big thing for 60 years - the technology problems have been solved, and they can be made cheaply, and provide acceptable quality even over standard phone lines. Problem is, on the consumer side, _people don't want to use them_. Video telephony has always been a technology searching for consumer demand, and it hasn't gotten there yet.
That's the danger, seriously. There's a clear tradeoff here: if software is too restrictive in what it will allow for a password (i.e. frequent changes, very complex passwords with no actual words, etc.), then the average user will give up trying to remember them, and start to write them down. You'll trade a situation where, by dedicating a lot of processing power to the task, you'll be able to crack some passwords, to one where every second keyboard has a Post-It stuck to the underside with this month's password. \
McFacts? Well, sort of. This link is from the Ohio Trial Lawyers Assoc., not exactly an unbiased source.
The wire may be cheap, but there are two problems:
1. Ordinary Cat 5 won't hack it, you'll need cable that's armored for either aerial or underground/trenched drop. The first needs to be water/temp resistant, the second also needs to have to strength to handle the pressure when the ground freezes (assuming you're somewhere where that happens).
2. The cost of the link is primarily the construction cost, not the cost of the medium itself. In the US, pulling underground fiber or coax costs ~$7 per foot, more in dense urban areas. That'll bring you to $35k for a mile, not $200. If it were that cheap to build last mile circuits with Cat5, the CLECs wouldn't have bothered with leasing ILEC local loops, they'd have just built their own.
Sure, laws can prohibit that stores deny access to minors! Car dealerships are prohibited from selling cars to persons under 18 (no right to contract), and gun dealers sure as heck can't just sell Glocks to any 13-year-old that walks in the door. We prohibit stores from engaging in transactions with minors all the time.
Yeah, we all thought back in 1995/6 that AOL was doomed: "As soon as people get their sea legs with the 'net, they'll branch out." Guess what? They didn't. AOL has succeeded brilliantly in making their walled garden proprietary service a great solution for the vast majority of netizens who aren't /. folks.
A partnership like this is going to be very helpful if Tivo is going to make the jump from being a product for the people who read this site, to a product for the 99+% of consumers who don't, and don't want to. AOL knows how to sell to those folks with an easy-to-use, and more importantly EASY-TO-EXPLAIN solution. Tivo's biggest problem has not been getting people to pay for the service once they understand it (there's a lot of "You'll take my Tivo from my cold dead hands" out there), but rather getting people to try it.
The most interesting potential here would be if AOL decided to throw some serious marketing $ behind this, and increase the inherent subsidy in the hardware prices, then penetration for these boxes could really take off.
Yeah, the gizmos are cool, but the service quality is awful. I literally get dropped 25-30% of the time when using my imode phone in Tokyo, vs. ~5% of the time in the US.
"And if you think they can buy EA and Square, not likely. They're rich, but not THAT rich. I dunno, I could be wrong - a better financial analyst could step in here - but EA and Square (which have a joint venture, recall) are pretty hefty companies, especially Square in Japan. I don't think they'd be that easy to buy."
Well, Square's market cap plus net debt is about $885MM, Nintendo's is $23.7BN, and EA's is $8.8BN. MSFT has about $38BN in Cash/Marketable Securities. If MSFT really wanted to, it could buy Square, Nintendo, and EA, and still have >$5 billion in cash on hand. The US and Japanese competition authorities almost certainly wouldn't let them do it, but they'd have the financial resources to do so. That being said, I fully agree with the rest of the material. MSFT certainly doesn't have a Midas touch on the consumer side - look at MSN.